The Supreme Court yesterday turned back an attack on how Federal Trade Commission members decide whether to disqualify themselves from regulatory proceedings.
In a session that included decisions on a number of important business and economic issues, the court agreed to decide if defendants in federal antitrust cases can try to limit their potential liability by distributing the blame for the alleged violations and refused to lift a lower cout order that is blocking a big railroad merger.
Without comment, in the FTC case, the court left intact a ruling that commission Chairman Michael Pertschuk does not have to disqualify himself from the agency's rule-making for television commercials aimed at young children.
Pertschuk voluntarily withdrew from the children's advertising proceedings last Jan. 7, but is under no legal obligation to stay out.
Congress has suspended those proceedings by passing a law requiring the commission to establish rules based solely on "deceptive acts and practices." The legislation, signed into law by Presdient Carter on May 28, bans the commission's use of an "unfairness" standard in those proceedings.
The FTC in early 1978 invited public comment on possible trade regulations that could ban all televised advertising directed to children. After the start of the rule-making proceedings, including full public hearings, the advertising industry demanded that Pertschuk disqualify himself. The complaint cited statements made by Pertschuk to show that he could not be an "impartial arbiter" but Pertschuk refused to disqualifty himself and the commission refused to order him disqualified.
U.S. District Court Judge Gerhard Gesell ordered Pertschuk to disqualify himself out the U.S. Circuit Court of Appeals here reversed Gesell last Dec. 27, ruling by a 2-to-1 vote that Pertschuk's discussion of the matter "is not sufficient to disqualify an administrator."
In another decision with potentially great impact on antitrust law, the justices said they will hear the appeal of three corrugated container manufacturers who may face paying a lion's share of more than $5 billion in damages.
Lower courts ruled that, under antitrust laws, the three manufacturers cannot seek to limit their potential liability to their supposed role in an alleged price-fixing conspiracy by 37 manufacturers. Georgia-Pacific Corp., Westvaco Corp. and Packaging Corp. of America are among the 37 corrugated container manufacturers named in one or more of about 60 antitrust suits.
The consolidated suits, alleging that from 1960 to 1978 the 37 companies participated in a nationwide conspiracy to fix prices, have not yet gone to trial. At least 29 of the manufacturers have settled out of court in settlements totaling more than $300 million, reportedly the largest antitrust settlement in history.
The court also agreed to review a separate case involving alleged sex discrimination. In it, Northwest Orient Airlines is asking the court to rule that labor unions can be held partially liable in a sex bias lawsuit when then cause an employer to pay male employes more than female employes.
Northwest, found to have violated the Equal Pay Act of 1963, contends that the discrimination imposed against its female employes was caused by sexually discriminatory collective bargaining agreements with the Transport Workers Union and the Air Line Pilots Association. The justices said they will hear arguments in the Westvaco case.
In the railroad case, the court declined to lift a stay issued by a lower federal court that is holding up the merger of the Burlington Northern and the St. Louis-San Francisco railway companies.
The merger received the blessing of the Interstate Commerce Commission in April but the decision was challenged in the Fifth Circuit Court of Appeals by the Missouri-Kansas-Texas Railroad Co. (Katy). That court issued the stay delaying the consummation of the merger pending resolution of the appeals on an expedited basis.
Katy is contending that it would be injured by a merger of the BN and the Frisco. In approving the merger, the ICC imposed some conditions on the merger partners for two years to protect competing railroads in the area of trackage rights and routing to give them time to ajust to the new competition.
But it generally rejected the claims of harm raised by the competing railroads and declined to impose the kinds of protective provisions the agency used to consider. It was only the second merger case to reflect the changed ICC policy.